SHERVANI SUGAR SYNDICATE Vs. UNION OF INDIA

JUDGEMENT

(1.) IN exercise of the powers conferred by Clause '3' of the Sugarcane (Control) Order, 1966, the Central Government issued Notification No. GSR 484 (E)/ESS. Com/Sugarcane dated 1st October, 1978 fixing the basic minimum price of sugarcane for the crushing season 1978-79 at Rs. 10/- per quintal linked to a recovery of 8.5% or below with a premium of 11.7647 paise per quintal for every 0.1% increase in recovery over 8.5%. The notification also specified in the schedule annexed thereto the minimum price payable by the owners of the vacuum pan process sugar factories for the aforesaid crushing season. Different prices have been fixed for different sugar factories for sugarcane that they may purchase. The petitioners have challenged the validity of the notification both with regard to the fixation of the basic minimum price of sugarcane and the different prices for the petitioner companies specified in the schedule. IN some of the petitions the validity of the order fixing the same price for the last year's standing sugarcane crop has also been challenged.

(2.) IN this State the purchase and supply of Sugarcane is governed by the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 (U.P. Act 24 of 1953), the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 and the U.P. Sugarcane Supply and Purchase Order, 1954. Each sugar factory is required to furnish to the Cane Commissioner an estimate of the quantity of cane required by the factory during the crushing season. The Cane Commissioner on receiving the estimate reserves or assigns an area of sugarcane in consultation with the factory and the Cane Growers Co-operative Society. The factory has to purchase all the cane grown in the reserved area which is offered for sale to it and has to purchase such quantity of sugarcane grown in the assigned area and offered for sale as may be determined by the Cane Commissioner. The agreement entered into between the factory and the cane cooperatives or the cane growers envisages payment of cane price notified by the Government. Clause '3' of the Sugarcane (Control) Order, 1966 empowers the Central Government to fix the minimum price of sugarcane payable by the producer of sugar. The relevant part of clause '3' run as follows :- "The Central Government may, after consultation with such authorities, bodies or associations as it may deem fit, by notification in the official gazette, from time to time, fix the minimum price of sugarcane to be paid by producers of sugar or their agents for the sugarcane purchased by them, having regard to- (a) the cost of production of sugarcane; (b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities; (c) the availability of sugar to the consumer at a fair price; (d) the price at which sugar produced from sugarcane is sold by producers of sugar, and (e) the recovery of sugar from sugarcane : Provided that the Central Government or, with the approval of the Central Government, the State Government may, in such circumstances and subject to such conditions as it may specify, allow a suitable rebate in the price so fixed. Explanation - (1) Different prices may be fixed for different areas or different quantities or varieties of sugarcane."

(3.) FIXATION of the basic minimum price of Rs. 10/- per quintal has been challenged on the ground that the Central Government totally ignored or failed to take into consideration the relevant factors set out in clause '3' of the Sugarcane (Control) Order, 1966 (hereinafter referred to as the Control Order). It was urged that the basic minimum price of sugarcane of Rs. 8.50 fixed for the year 1977-78 was arbitrarily enhanced to Rs. 10/- although the cost of production of sugarcane had not increased nor had the return to the grower from alternative crops and general trend of price of agricultural commodities undergone any change. In the petitions it has been asserted that there has been no increase in the cost of production of sugarcane since last year and that there has also been no increase in the return to the growers from alternative crops or in the general trend of prices of agricultural commodities. On behalf of the respondents it has been asserted in the supplementary-counter affidavit sworn by Sri S. Bansi, Deputy Secretary to the Government of India. Ministry of Agriculture and Irrigation, Department of Food, that cost of several inputs has increased resulting in increase in the cost of production, such as cost of agricultural labour, electricity charges, irrigation rates and fertilizers. The return available to the growers from alternative crops has also increased. The Government itself has increased its procurement price of wheat, rice and some other grains. Neither in the petition nor in the counter affidavits filed on behalf of the respondents any material has been furnished regarding cost of production of sugarcane or return to the grower from alternative crops and the general trend of prices of agricultural commodities. However, we see no reason to doubt the averment made on behalf of the respondents that these factors were taken into consideration in fixing the minimum price of sugarcane. According to the respondents the Central Government took into account the recommendations of the Agricultural Prices Commission. The recommendations of the Commission are based on datas collected by it regarding cost of production, return to the growers from various agricultural commodities and the prevailing market price etc. Since the recommendation of the Commission were taken into account by the Central Government while fixing the minimum price of sugarcane, it may be accepted that factors (a) and (b) set out in Clause 3(1) of the Control Order were in fact taken into consideration while fixing the basic minimum price of sugarcane.